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  • Income thresholds and rates for the private health insurance rebate

    The private health insurance rebate is income tested. This means that if your income is higher than the relevant income threshold, you may not be eligible to receive a rebate.

    Your rebate entitlement depends on your family status on 30 June. Different thresholds apply depending on whether you have a single income or a family income.

    When you lodge your tax return, we calculate your income for surcharge purposes and determine your rebate entitlement.

    Your entitlement is also based on the age of the oldest person covered by the policy.

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    See also:

    Income thresholds from 2015–16 to 2020-21

    From 1 July 2015, the income thresholds used to calculate the Medicare levy surcharge and private health insurance rebate will remain unchanged for six years. The thresholds remain at the 2014–15 levels from 2015–16 to 2020-21.

    Not adjusting the income thresholds for three years may result in individuals with incomes just below each threshold moving into a higher income threshold sooner if their income increases. This means:

    • if you have private health insurance, your private health insurance rebate percentage entitlement may decrease
    • if you do not have the appropriate level of private patient hospital cover, you may have to pay a Medicare levy surcharge. Or, if you paid a Medicare levy surcharge in the previous year, your Medicare levy surcharge rate may increase.
    Table 7: Income thresholds from 2015–16

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $90,000 or less

    $90,001 – $105,000

    $105,001 – $140,000

    $140,001 or more

    Family

    $180,000 or less

    $180,001 – $210,000

    $210,001 – $280,000

    $280,001 or more

    Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

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    Single income thresholds

    If you are single on the last day of the income year and have no dependants, you are income tested against the single income thresholds.

    This applies even if you had a spouse for the majority of the year, as long as you were single on the last day (30 June) of the income year.

    If you separated from your spouse during the financial year and remain single with no dependants as at 30 June, your rebate entitlement is calculated only on your own income.

    Your entitlement to a private health insurance rebate is based on your income for surcharge purposes.

    If you were single on 30 June, but had dependent children, you are considered a family and will be income tested using the family income thresholds.

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    Family income thresholds

    If you had a spouse on the last day (30 June), your income will be tested against the family income thresholds. Your entitlement to a private health insurance rebate is assessed on the combined income for surcharge purposes for you and your spouse.

    The family income thresholds also apply if:

    • you are a single parent with one or more dependants
    • you do not have a spouse on the last day of the income year and you either maintain a dependent child or children or contribute in a substantial way to the maintenance of a dependent child.

    If your spouse died in the income year and you were single on 30 June with no dependants, use your and your spouse's income for surcharge purposes to determine your entitlement under the family income thresholds.

    If you have two or more children, the family income threshold is increased by $1,500 for every Medicare levy surcharge dependent child after the first child. For example, if you have three dependent children, your family income threshold increases by $3,000.

    Note: Your dependent child's income is not included when calculating your family income.

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    Family status on 30 June

    Your family status on 30 June (the last day of the income year) determines whether the single or family income thresholds apply to you. Table 8 below provides a quick guide to when single or family thresholds apply.

    Table 8: Guide to when single or family thresholds apply

    Your status on 30 June

    Single thresholds

    Family thresholds

    Whose income for the full year is included in income test?

    You were single

    Yes

    No

    Yours

    You had a spouse

    No

    Yes (see Note)

    Yours and your spouse’s

    You were a single parent

    No

    Yes (see Note)

    Yours

    You separated from your spouse during the year and were single with no dependent children

    Yes

    No

    Yours

    You separated from your spouse during the year and were single with dependent children

    No

    Yes (see Note)

    Yours

    You were single for part of the year and then had a spouse and no dependent children

    No

    Yes

    Yours and your spouse’s

    You were single for part of the year and then had a spouse and dependent children

    No

    Yes (see Note)

    Yours and your spouse’s

    Your spouse died during the year and you were single and had no dependent children

    No

    Yes

    Yours and your spouse’s

    Your spouse died during the year and you were single and had dependent children

    No

    Yes (see Note)

    Yours and your spouse’s

    Note:The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

    Rebate entitlement by income threshold

    The private health insurance income thresholds for rebate purposes are normally adjusted annually on 1 April. However, the annual adjustment has been paused for three years from 2015–16.

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    Rebate entitlement by income threshold 2015–16

    Table 9: Rebate entitlement by income threshold 2015–16

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $90,000 or less

    $90,001 – $105,000

    $105,001 – $140,000

    $140,001 or more

    Family

    $180,000 or less

    $180,001 – $210,000

    $210,001 – $280,000

    $280,001 or more

    Table 9a: Rebate by age for premiums paid 1 July 2015 – 31 March 2016

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    27.820%

    18.547%

    9.273%

    0%

    65–69 yrs

    32.457%

    23.184%

    13.910%

    0%

    70 yrs or over

    37.094%

    27.820%

    18.547%

    0%

    Table 9b: Rebate by age for premiums paid 1 April 2016 – 30 June 2016 (see Note)

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    26.791%

    17.861%

    8.930%

    0%

    65–69 yrs

    31.256%

    22.326%

    13.395%

    0%

    70 yrs or over

    35.722%

    26.791%

    17.861%

    0%

    Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

    Rebate entitlement by income threshold 2016–17

    Table 10: Rebate entitlement by income threshold 2016-17

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $90,000 or less

    $90,001 – $105,000

    $105,001 – $140,000

    $140,001 or more

    Family

    $180,000 or less

    $180,001 – $210,000

    $210,001 – $280,000

    $280,001 or more

    Table 10a: Rebate entitlement by age for premiums paid 1 July 2016 – 31 March 2017

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    26.791%

    17.861%

    8.930%

    0%

    65–69 yrs

    31.256%

    22.326%

    13.395%

    0%

    70 yrs or over

    35.722%

    26.791%

    17.861%

    0%

    Table 10b: Rebate entitlement by age for premiums paid 1 April 2017 – 30 June 2017

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    25.934%

    17.289%

    8.644%

    0%

    65–69 yrs

    30.256%

    21.612%

    12.966%

    0%

    70 yrs or over

    34.579%

    25.934%

    17.289%

    0%

    Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

    The rebate percentages in Table 10 will apply to the premiums paid until 31 March 2018. In March 2018, the Department of Health will announce the rebate percentages for premiums paid from 1 April 2018 to 31 March 2019.

    Rebate entitlement by income threshold 2017–18

    Table 11: Rebate entitlement by income threshold 2017–18

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $90,000 or less

    $90,001 – $105,000

    $105,001 – $140,000

    $140,001 or more

    Family

    $180,000 or less

    $180,001 – $210,000

    $210,001 – $280,000

    $280,001 or more

    Table 11a: Rebate by age for premiums paid 1 July 2017 – 31 March 2018

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    25.934%

    17.289%

    8.644%

    0%

    65–69 yrs

    30.256%

    21.612%

    12.966%

    0%

    70 yrs or over

    34.579%

    25.934%

    17.289%

    0%

    Table 11b: Rebate for premiums paid 1 April 2018 – 30 June 2018

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    25.415%

    16.943%

    8.471% 

    0%

    65–69 yrs

     29.651%

    21.180% 

    12.707% 

    0%

    70 yrs or over

     33.887%

    25.415% 

    16.943% 

    0%

    Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

    Income thresholds and rates for previous years

    Table 12: Rebate entitlement 2010–11 and 2011–12 (no income test)

     

    2010–11

    2011–12

    Under 65 yrs

    30%

    30%

    65–69 yrs

    35%

    35%

    70 yrs or over

    40%

    40%

    Table 12a: Rebate entitlement by income threshold 2012–13

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $84,000 or less

    $84,001 – $97,000

    $97,001 – $130,000

    $130,001 or more

    Family

    $168,000 or less

    $168,001 – $194,000

    $194,001 – $260,000

    $260,001 or more

    Table 12b: Rebate by age for premiums paid 1 July 2012 – 30 June 2013

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    30%

    20%

    10%

    0%

    65–69 yrs

    35%

    25%

    15%

    0%

    70 yrs or over

    40%

    30%

    20%

    0%

    Table 13: Rebate entitlement by income threshold 2013–14

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $88,000 or less

    $88,001 – $102,000

    $102,001 – $136,000

    $136,001 or more

    Family

    $176,000 or less

    $176,001 – $204,000

    $204,001 – $272,000

    $272,001 or more

    Table 13a: Rebate for premiums paid 1 July 2013 – 31 March 2014

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    30%

    20%

    10%

    0%

    65–69 yrs

    35%

    25%

    15%

    0%

    70 yrs or over

    40%

    30%

    20%

    0%

    Table 13b: Rebate for premiums paid 1 April 2014 – 30 June 2014

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    29.040%

    19.360%

    9.680%

    0%

    65–69 yrs

    33.880%

    24.200%

    14.520%

    0%

    70 yrs or over

    38.720%

    29.040%

    19.360%

    0%

    Table 14: Rebate entitlement by income threshold 2014–15

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Single

    $90,000 or less

    $90,001 – $105,000

    $105,001 – $140,000

    $140,001 or more

    Family

    $180,000 or less

    $180,001 – $210,000

    $210,001 – $280,000

    $280,001 or more

    Table 14a: Rebate by age for premiums paid 1 July 2014 – 31 March 2015

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    29.040%

    19.360%

    9.680%

    0%

    65–69 yrs

    33.880%

    24.200%

    14.520%

    0%

    70 yrs or over

    38.720%

    29.040%

    19.360%

    0%

    Table 14b: Rebate by age for premiums paid 1 April 2015 – 30 June 2015

     

    Base tier

    Tier 1

    Tier 2

    Tier 3

    Under 65 yrs

    27.820%

    18.547%

    9.273%

    0%

    65–69 yrs

    32.457%

    23.184%

    13.910%

    0%

    70 yrs or over

    37.094%

    27.820%

    18.547%

    0%

    Income tests for the private health insurance rebate

    When estimating your income for private health insurance rebate purposes, you need to think about how your circumstances may affect whether the single or family threshold applies, including:

    • whether you or your spouse expects an increased income in the income year – for example, from a promotion, change in employment, or overtime
    • your single or family status – for example, having a partner at the end of the income year
    • whether any dependent children will no longer be in your care
    • if any dependent children are      
      • turning 21 years old
      • older than 21 and under 25 years old, and no longer in full-time study.
       

    Each adult covered by the policy is income tested:

    • to determine their entitlement to a private health insurance rebate, regardless of who pays for the insurance policy
    • on their share of the cost of the insurance policy.

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    One adult covered by a policy

    If you are the only adult covered by a private health insurance policy, your share of the policy for rebate purposes is the total cost of the policy excluding any lifetime health cover loading. You are income tested to determine your private health insurance rebate entitlement regardless of who pays for the policy.

    Example: One adult covered by a policy without lifetime health cover loading

    In 2017–18, Narelle is single, 45 years old and the only adult covered by her private health insurance policy. She did not have any lifetime health cover loading.

    On 1 July 2017, Narelle nominated to receive a premium reduction of 17.289%. On 1 April 2018, the rebate percentage was adjusted. As a result, the health insurer provided Narelle with a premium reduction of 16.943% for premiums paid from 1 April 2018 to 30 June 2018.

    Narelle paid premiums monthly as follows:

    • $715 between 1 July 2017 and 31 March 2018 after premium reductions of $149
    • $252 between 1 April 2018 and 30 June 2018 after premium reductions of $52.

    When Narelle lodges her 2018 tax return, her income for surcharge purposes is $83,000. As her income is below $90,000, Narelle's PHI rebate entitlement is:

    • 25.934% for premiums paid between 1 July 2017 and 31 March 2018
    • 25.415% for premiums paid between 1 April 2018 and 30 June 2018.

    Because Narelle received less rebate than she was entitled to from her insurer through reduced premiums, she gets a refundable tax offset of $100 in her tax return. This offset is listed on her notice of assessment.

    End of example

     

    Example: One adult covered by a policy with LHC loading – employer pays premiums

    Peta is 50 years old and is single. In 2017–18, Peta’s employer pays for her private health insurance policy as a condition of her employment. The total cost of Peta's insurance policy is $1,200, and her lifetime health cover loading is $200. This means the premiums eligible for the rebate total $1,000. Peta claims a 25.934% premium reduction for the policy, and her employer paid the remaining $941 for the policy on 1 July 2017.

    Peta lodges her 2018 tax return, and her income for surcharge purposes for the year is calculated as $99,000. Peta’s income falls into the income threshold for entitlement to a 17.289% rebate. Because Peta elected to receive 25.934% as a premium reduction, she incurs $86 liability for the extra 8.645% rebate that she had already claimed. The liability is listed on her income tax notice of assessment.

    End of example

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    Multiple adults covered by a policy

    If a policy covers more than one adult, the premiums paid are divided into equal shares by the number of adults covered by the policy at the time of the payment, regardless of who paid the premium or whether the adults on the policy are a part of a couple.

    Each adult’s share of the policy is equal to the total cost of the policy divided by the number of adults covered by the policy at the time of payment.

    When they lodge their tax return, each adult is income tested to determine their private health insurance rebate entitlement for their share of the cost of the policy. As each adult will be income tested according to their circumstances, there may be different outcomes for each adult.

    Example: Single adult sharing a policy

    Mike and Elle are both single and live together in shared accommodation. For convenience, they take out an insurance policy together in 2017–18, which is paid monthly as a joint expense of the house.

    The policy costs $1,000, which means they each have a $500 share in the policy. They do not claim the rebate as a premium reduction.

    Mike's income is $150,000 and he is not entitled to any rebate when he lodges his tax return.

    Elle's income is $55,000 and she is entitled to a:

    • 25.934% rebate from the government in form of refundable tax offset for premiums paid between 1 July 2017 and 31 March 2018
    • 25.415% rebate from the government in form of refundable tax offset for premiums paid between 1 April 2018 and 30 June 2018.
    End of example

     

    Example: Divorced adults covered by the same policy

    Charlie and Zoe got divorced in January 2018. However, they shared the same complying private health insurance policy in 2017–18. Under their family agreement, Zoe pays for her share as well as Charlie’s share of the premiums on a monthly basis. They did not pay any lifetime health cover loading.

    On 1 July 2017, Zoe nominated to receive a premium reduction of 25.934%. On 1 April 2018, the rebate percentage was adjusted and, as a result, the health insurer provided Zoe with a premium reduction of 25.415% for premiums paid from 1 April 2018 to 30 June 2018. Zoe paid premiums monthly as follows:

    • $1,111 between 1 July 2017 and 31 March 2018 after a premium reduction of $389
    • $392 between 1 April 2018 and 30 June 2018 after a premium reduction of $134.

    Charlie and Zoe will be income tested on the policy in equal shares. Any rebate entitlement they are individually eligible for applies to their own share of the policy. Their individual share of the policy is:

    • $556 between 1 July 2017 and 31 March 2018 after a premium reduction of $194
    • $196 between 1 April 2018 and 30 June 2018 after a premium reduction of $67.

    Charlie and Zoe are both under 65 years old. Zoe has an income of $106,000 and Charlie has an income of $140,200. They are both assessed under the income thresholds as single because they are not married on the last day of the income year and do not have any dependent children.

    Zoe’s individual income means that her rebate entitlement is:

    • 8.644% for premiums paid between 1 July 2017 and 31 March 2018
    • 8.471% for premiums paid between 1 April 2018 and 30 June 2018.

    When Zoe lodges her tax return for the year, she will need to pay some rebate back because she received more rebate than she was entitled to. Zoe will pay back:

    • $129 for the period 1 July 2017 – 31 March 2018
    • $45 for the period 1 April 2018 – 30 June 2018.

    Zoe will incur a private health insurance liability of $174 on her notice of assessment.

    Because Charlie’s individual income is above the top income threshold, he is not entitled to any rebate. Charlie will need to pay back:

    • $194 for the period 1 July 2017 – 31 March 2018
    • $67 for the period 1 April 2018 – 30 June 2018.

    Even though Charlie did not pay for the policy, he will receive a liability of $261 on his notice of assessment for his share of the policy.

    End of example

    Dependent children covered by a policy

    Dependent children are not income tested and their income does not count towards the income test.

    Anyone covered as a dependent child on a private health insurance policy is not considered to have a share of the cost of the policy and is not income tested to determine their entitlement to a private health insurance rebate.

    Under the Private Health Insurance Act 2007, a dependent child is either:

    • a person who is under 18 years old, or
    • a dependent child under the rules of the private health insurer who is under 25 years of age and does not have a partner.

    Your private health insurer can advise you who is covered as a dependent child on your policy.

    Example: Dependent child covered by a family policy

    Caroline and Gordon are married with a son, Archie. Archie is 19 years old, studying full time at university, and he earns $95,000 a year as a part-time model. Under the rules of their private health insurer, Archie is classified as a dependent child because he is studying full time. Because Archie is covered by the family policy, he is:

    • covered as a dependent child and his income is not taken into consideration for the family income threshold
    • not income tested for any share of the policy because he is not entitled to a private health insurance rebate
    • exempt from the Medicare levy surcharge as he has an appropriate level of private patient hospital cover for the full year.
    End of example

    Dependent child-only policies

    A dependent child covered by a child-only policy is not income tested to determine their rebate entitlement to a private health insurance rebate.

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    Last modified: 29 Jun 2018QC 49965